The Nation Newspaper

Tag: Brokers

  • ‘Nigeria lacks adequate brokers to drive insurance penetration’

    Mr Kayode Okunoren,  the President,  Nigeria Council of Registered Insurance Brokers (NCRIB), has said the country lacked adequate brokers to facilitate insurance penetration needed for the growth of the industry.

    Okunoren told the News Agency of Nigeria (NAN) at the sideline of the ongoing e-Insurance conference in Lagos at the weekend.

    NAN reports that the conference was organised by Pinets Informatics Ltd with the theme: “Driving Insurance Penetration with ICT.’’

    Okunoren said the number of brokers in the country was not enough to drive insurance penetration to every part of the country.

    According to him, if one broker is allocated to one local government, the country will still not be covered.

    “We have 774 local governments, assuming a broker is allocated to one local government, it will not still be enough because we have just 500 brokers in the country.

    “The question now is that, is a broker enough to cover a local government?

    “And if we are to deepen insurance penetration we need more brokers,” he said.

    He urged the National Insurance Commission (NAICOM) to grant operating licences to more brokers for optimal productivity.

  • Brokers urged to boost penetration in up-country

    •New FRC code threat to brokers, says NCRIB

    Insurance brokers need to expand their operations beyond the commercial cities of Nigeria to up-country locations to boost penetration, Commissioner for Insurance, National Insurance Commission (NAICOM), Mohammed Kari, has said.

    Kari stated this at the Insurance Brokers Conference and Exhibition at the Transcorp Hilton Hotel, Abuja.

    He urged brokers to shift their focus to  states and  local governments  that are without the presence of any insurance institution.

    According to him, one of the primary future goals of NAICOM is to have more informed insurance consumers in the system and as it has been noted at many fora, there exist information gap between the insurer and the insured.

    He said the task of the insurance broker should go beyond the collection of premium, claims’ cheque where applicable and forwarding of renewal notices, noting that conscious effort should be made by brokers to bridge the information and knowledge gap between the provider and the consumer.

    He said: “The insurance sector will benefit the economy only when high penetration is achieved. I dare say that high penetration cannot be achieved when most providers concentrate their operations in the commercial cities of Nigeria. Many local governments and even some states are without the presence of any insurance institution. This provides all the space the so-called quacks need to shine. This obviously does not help the penetration of insurance in the country and does not promote future growth of the industry.

    “What we have noticed is that while on one hand, the insurance service providers hardly explain enough what they sell the contract document, on the other hand, the policyholders neither read nor ask questions about the contract document of what they buy. So, the insurance broker is well positioned to bridge this gap.

    “The brokers could even take it a step further. With good understanding and proper arrangement, brokers could actually enter into partnership with insurance companies to represent their interest in up-country locations. The practice of all brokers chasing the so-called “juicy” government accounts should be discouraged. It is not helping the growth of the industry, while at the same time it has attracted unpalatable publicity.”

    The commissioner stressed that demonstration of professionalism is a necessity in insurance business.

    “When it is convenient we argue that our trade is a professional undertaking, but we operate as limited liability companies with shareholders or investors who are not trained in insurance but control our policies and operations. High professional ethics, moral standards and discipline is expected of professionals and that is what we must give to gain that professional respect. We have to take the bull by the horns and exorcise the bad spirit within us. The future market will certainly belong to that broker who has worked hard enough to secure the trust and loyalty of the consumer today.”

    NCRIB President, Kayode Okunoren in his speech said the newly released Code of Corporate Governance by the Financial Reporting Council is a threat to broking firms and the industry as a whole.

    He said although they are all aware of the need for strong corporate governance rules in ensuring sanity in business, the application of the rules with regards to the position of CEOs of insurance broking firms who have more than eight members of  staff in their companies would do the economy no good.

    “We like to reiterate here that insurance broking firms are professional institutions like the law firm, or the accounting firms, where services are personalised or based on the expertise of a few professionals within the organisation. We have instances where there are just two to three core insurance professionals in some broking firms, but with more than 15 support or non-technical staff.

    “Asking the Managing Director or and the Executive Director to leave such companies on the attainment of 10 years in office will create a big vacuum as well as threaten the continual existence of such firms. Moreover, we must come to terms with the fact that the insurance industry is still quite fragile and challenged by insufficient manpower.

    ‘’It is the hope of our council that the FRC would continue to be open to more constructive dialogue that would further make the rules more amenable to change or moderation, in view of the peculiarity of the Nigerian economy,” he noted.

     

  • ‘Brokers connive with vehicle owners to dodge insurance’

    Why is insurance unpopular? Some stakeholders have an answer. They are Vehicle Inspection Officers (VIOs), Federal Road Safety Commission (FRSC), Federal Fire Service, insurance consumers and others.

    The stakeholders spoke at the  Almond Insurance Consumers Forum in Lagos.

    The VIOs said insurance brokers  connive with vehicle owners to issue fake or expired insurance policies, which are uploaded on the Nigerian Insurance Industry Database (NIID) as part of particulars of impounded vehicles.

    Assistant Chief Vehicle Inspector Officer, Mrs. Adeshola Adeboshin, said such action was unfortunate as they (VIOs) rely on the NIID through the use of a verifier, Auto Inspector, to verify fake and expired particulars.

    According to her, they use this medium without having to stop all vehicles to know if they have genuine particulars. She said all they do is input an upcoming vehicle plate number on the device and it brings up its details.

    She explained that they only stop vehicles that have fake and expired particulars while on patrol or at checkpoints.

    She said it was regrettable that the easy way for them to check and apprehend vehicles with fake particulars, especially insurance, is being threatened by the activities of some unscrupulous brokers.

    Mrs Adeboshin urged the regulatory authority and other trade associations to address the situation. She pointed out they had been able to detect the brokers nocturnal acts as they were able to differentiate between the time they impounded the vehicle for fake insurance certificate and when the  genuine certificate was uploaded on the NIID database.

    She warned that anyone caught with fake particulars would face criminal charges.

    Meanwhile, the Federal Fire Service said insurers were yet to remit money accruable from the 0.25 per cent Fire Service Maintenance Fund between the insurance industry and the Federal Fire Service.

    Fire Officer, Ahmadu Sakiru, said the 0.25 per cent is a revenue to be contributed by insurance firms to the Fire Service Maintenance Fund.

    FRSC said the Commission had discovered that may school buses  do not have insurance certificates.

    Its Public Relations Officer, Paul Abiti, said the FRSC regulation on school buses requires that they have comprehensive insurance. He called on the Nigeria Insurers Association (NIA) to engage the schools by enlightening them to hasten compliance.

    Chairman of the occasion, a former Chairman, Nigerian Insurers Association (NIA), Olusola Ladipo-Ajayi, said the inability of law enforcement agents to enforce the purchase of insurance by Okada and tricycle (Keke) owners have continued to deny insurance operators billions of Naira yearly.

    He said insurance companies parade good products for Keke and Okada riders, but lack of enforcement has made the parties not to buy the products, noting that  when the laws were being enforced, the parties were buying the products but now they drive without insurance cover, because they were not compelled to buy.

    He urged the government to support insurance by enforcing the procurement of compulsory insurances, adding that the insurance operators could not be selling products and at the same time carrying out enforcement.

    Progressive Shareholders Association of Nigeria (PSAN) President, Boniface Okezie, urged insurers to reach out to okada riders and keke drivers, advising them to buy insurance as it would enhance the premium base of the industry and by extension, shareholders.

    At the end of the event, a communiqué was drawn. The forum agreed that there was need for the industry to create awareness on what insurance is and how the public could benefit from its protection. The industry should put in place more efforts to promote insurance literacy in the country, they added.

    They also said the insurance practitioners should put in more efforts to leverage on modern technology in the distribution of insurance products and that there should be an enhanced collaboration between the industry and the relevant government agencies in promoting compulsory insurances in the country.

    “The industry should put in place a more efficient complaint bureau system to settle disputes arising in insurance contracts in the country. The companies in the market should strive to set up efficient research departments that would enable them to identify the insuring needs of the  publics.

    “There is need for training and re-training of the insurance market operators so that they should be abreast with the contents of the products that they are marketing to the insuring public. Insurance practitioners should look for the opportunities coming from the economic recession, more so that recession is risk and insurance is all about risk management. There is need for the industry to adopt modern technology to efficiently remind policyholders of policies that were due for renewals,” Okezie added.

     

     

  • NAICOM uncovers insurance scams by brokers, underwriters

    NAICOM uncovers insurance scams by brokers, underwriters

    The National Insurance Commission (NAICOM) has uncovered insurance scams perpetrated by some registered, unregistered insurance brokers and underwriters in conjunction with various state governments.

    Commissioner for Insurance Mohammed Kari made this known while speaking at the 2016 Annual Chief Executive Officers Retreat of the Nigerian Council of Registered Insurance Brokers (NCRIB) held in Ilesha, Osun State. The theme was: Growing Insurance Amidst Regulations.

    Kari said these activities are illegal, criminal and punishable under the laws of the country. He warned brokers and underwriters alike to beware, adding that the Commission has beamed its searchlight on the firms. He noted that the unrepentant companies and individuals engaged in these schemes would answer for their deeds

    The commissioner lamented the increase in number of brokers that are regrettably yet to reflect on the level of insurance penetration in the country. He said: “Indeed the Nigerian Insurance market has grown in the last decades. There has also been a substantial increase in the number of players and activities; although and regrettably too this increase in the number of players especially brokers is yet to reflect on the level of insurance penetration in the country.

    “The only possible explanation for this could be that intermediaries are not creating new business neither are they expanding their operations beyond the major cities of the country and around a few clients that are already converted insurance consumers. This should be of serious concern to any right thinking professional.

    “The face of regulation has changed over the years, but the objectives and purposes have continued to be providing comfort and confidence to the consumers while at the same time developing the market.”

    He stressed that the task of market development is everybody’s, however; it is the trend to quiz the regulator why market penetration is low.

    He said penetration would continue to be low if everyone would only operate from the comfort of the metropolis or chase only existing clients with insurance policies.

    “The poor penetration of insurance in the country is no more a new statement or information. It is a position we all certainly cannot be proud of. What should be done in this ugly situation is the issue. Developing a robust insurance sector in any country requires developing a good strategy on insurance penetration.

    “While the newly formed Insurer’s Committee has set up various sub committees to look at that and more issues, the Commission is complementing those efforts by expanding its enforcement of compulsory insurance’s down to the states level. In the process we sadly found all sorts of under the table arrangements where insurance policies are being offered in conjunction with various state governments to unsuspecting public, sometimes with registered brokers and in most cases with unregistered and unlicensed entities.

    “This is Illegal, criminal and punishable under the laws of the country. Brokers and underwriters alike should beware as we have beamed our searchlight to that direction. Unrepentant companies and individuals that are engaged in these schemes would answer for their actions.

    “We have also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards, we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which would soon be exposed for input,” he added.

    Kari said it is expedient to note that prior to the recent economic challenges, pressure was building for the insurance industry to be more flexible and to approach business in a more dynamic fashion.

    He urged insurance institutions to find a way to break out of the soiled  systems which perpetuate a limited view of the customer.

    It is this view that impresses on us that we are doing well when we snatch a client from another or when we get on a long list of the brokers of a fat government client, though adding no value at all. New models of business and enterprise architecture need to arise; where integrating with newer technology solutions and effecting process improvements that leverage the capabilities of existing personnel and applications can become the norm, he added.

  • NSE, brokers pick May & Baker as stock to watch for sustainable growth

    May & Baker Nigeria Plc has sustainable growth potential and its fundamentals and investments have positioned it to deliver better returns in the medium to long term.

    This was the assessment of top management and dealers at the Nigerian Stock Exchange (NSE) who undertook a factory tour of May & Baker Nigeria’s manufacturing complex in Ota, Ogun State. The manufacturing complex includes May & Baker Nigeria’s World Health Organisation (WHO)-certified pharmaceutical manufacturing plant, otherwise known as The Pharma Centre.

    May & Baker Nigeria’s share price recorded the highest gain last week at the NSE, rising by 10.64 per cent to close at N1.04 per share. The benchmark index at the NSE, the All Share Index (ASI), indicated a week-on-week average gain of 0.05 per cent.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema led the team of the leadership of the Nigerian stock market, which included president, Association of Stockbroking Houses of Nigeria (ASHON), Mr Emeka Madubuike and Doyen of Stockbrokers, Mr. Sam Ndata.

    Onyema said May & Baker Nigeria has taken a long-term view of development by its investments in the Ota manufacturing complex noting that such long-term view guarantees sustainable growth.

    “Another thing that impresses me about the company is that most quoted companies want to see their share price do well. They want short-term gain. So they take a shorter view to investing. But the company has done the opposite. It takes a long-term view which, in my opinion, is more sustainable,” Onyema said.

    He said the current share price of the company belied its earnings potential and reflected the downturn in the national economy and the stock market.

    “We commend you for the diversification of your business and for the long term investment strategy. The low price of your share is reflective of the general condition of the Nigerian economy. Be assured that your share price will go up once the economy picks up. This is because the company has good fundamentals, like your price earnings ratio is a good indicator to show that the company has bright future,” Onyema said.

    He said the factory tour has given the market opportunity to get acquainted with the challenges the company is facing, the opportunities before it and its expectations for the future, adding that he was fascinated by the diversification as well as the long-term nature of May & Baker Nigeria’s vision.

    Onyema said the company should consider a combination of bond and equity issue as it seeks to raise fresh fund to bolster its operations and deleverage its balance sheet.

    Madubuike said May & Baker Nigeria is a stock for investors that seek stable and sustainable returns on investments.

    According to him, May & Baker Nigeria will make a lot of progress with its investments and it is one of the companies for the future.

    Ndata praised the management of May & Baker Nigeria and urged them to interact more with the investing public in order to give them better understanding of the prospects of the company.

    “It is a stock for the future, it is best to buy now that the price is low, anybody that buys now will be smiling to the bank later,” Ndata said.

    Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, said the share price of the company does not reflect its fundamental values and recent investments, including its position as one of the four pharmaceutical companies certified by the WHO as having current general manufacturing practices.

    “May & Baker Nigeria has potentials as a strong Sub-Saharan African brand. A country with huge population of over 188.6 million people; biggest economy in Africa; strong Gross Domestic Product growth rate of 6.5  per cent in 2014 to 4.0 per cent in 2016 and vibrant workforce with emerging middle class, has a lot to benefit from the success of this our great company,” Okafor said.

    He noted that the pharmaceutical business contributes 70 per cent of the company’s revenue and recapitalisation of the business would improve its ability to compete in current and planned businesses.

  • NSE, brokers pick May & Baker as stock to watch for sustainable growth

    May & Baker Nigeria Plc has sustainable growth potential and its fundamentals and investments have positioned it to deliver better returns in the medium to long term.

    This was the assessment of top management and dealers at the Nigerian Stock Exchange (NSE) who undertook a factory tour of May & Baker Nigeria’s manufacturing complex in Ota, Ogun State. The manufacturing complex includes May & Baker Nigeria’s World Health Organisation (WHO)-certified pharmaceutical manufacturing plant, otherwise known as The Pharma Centre.

    May & Baker Nigeria’s share price recorded the highest gain last week at the NSE, rising by 10.64 per cent to close at N1.04 per share. The benchmark index at the NSE, the All Share Index (ASI), indicated a week-on-week average gain of 0.05 per cent.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema led the team of the leadership of the Nigerian stock market, which included president, Association of Stockbroking Houses of Nigeria (ASHON), Mr Emeka Madubuike and Doyen of Stockbrokers, Mr. Sam Ndata.

    Onyema said May & Baker Nigeria has taken a long-term view of development by its investments in the Ota manufacturing complex noting that such long-term view guarantees sustainable growth.

    “Another thing that impresses me about the company is that most quoted companies want to see their share price do well. They want short-term gain. So they take a shorter view to investing. But the company has done the opposite. It takes a long-term view which, in my opinion, is more sustainable,” Onyema said.

    He said the current share price of the company belied its earnings potential and reflected the downturn in the national economy and the stock market.

    “We commend you for the diversification of your business and for the long term investment strategy. The low price of your share is reflective of the general condition of the Nigerian economy. Be assured that your share price will go up once the economy picks up. This is because the company has good fundamentals, like your price earnings ratio is a good indicator to show that the company has bright future,” Onyema said.

    He said the factory tour has given the market opportunity to get acquainted with the challenges the company is facing, the opportunities before it and its expectations for the future, adding that he was fascinated by the diversification as well as the long-term nature of May & Baker Nigeria’s vision.

    Onyema said the company should consider a combination of bond and equity issue as it seeks to raise fresh fund to bolster its operations and deleverage its balance sheet.

    Madubuike said May & Baker Nigeria is a stock for investors that seek stable and sustainable returns on investments.

    According to him, May & Baker Nigeria will make a lot of progress with its investments and it is one of the companies for the future.

    Ndata praised the management of May & Baker Nigeria and urged them to interact more with the investing public in order to give them better understanding of the prospects of the company.

    “It is a stock for the future, it is best to buy now that the price is low, anybody that buys now will be smiling to the bank later,” Ndata said.

    Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, said the share price of the company does not reflect its fundamental values and recent investments, including its position as one of the four pharmaceutical companies certified by the WHO as having current general manufacturing practices.

    “May & Baker Nigeria has potentials as a strong Sub-Saharan African brand. A country with huge population of over 188.6 million people; biggest economy in Africa; strong Gross Domestic Product growth rate of 6.5  per cent in 2014 to 4.0 per cent in 2016 and vibrant workforce with emerging middle class, has a lot to benefit from the success of this our great company,” Okafor said.

    He noted that the pharmaceutical business contributes 70 per cent of the company’s revenue and recapitalisation of the business would improve its ability to compete in current and planned businesses.

  • Stock Exchange expels brokers for shares fraud

    The council of the Nigerian Stock Exchange (NSE) has revoked the dealing licence and expelled some stockbroking firms for fraudulent sales of shares of their clients.

    The firms allegedly sold the shares of their clients without authorisation, a reference to common shares fraud where stockbrokers sell clients’ shares to take advantage of market prices or buoy their liquidity.

    In a circular issued to all stockbroking firms last week, which was obtained by The Nation, the NSE indicated that two stockbroking firms were delisted from the membership list at the stock market and their directors and employees  embargoed from working in any other stockbroking firm without the approval of the Exchange.

    According to the notice, the two firms- Lakesworth Investment & Securities Limited and Gosord Securities Limited, were investigated and indicted for unauthorised sales of investors’ shares.

    The multiple fraudulent transactions were in breach of the Article 59, section five of the Rules and Regulations Governing Dealing Members of the Exchange, the charter-like code and mode of operations that regulate stockbrokers at the Exchange.

    With the revocation of their licences and expulsion from the market, no dealing members must engage in any type of activity with the firms. Besides, Article 144, subsection C makes it mandatory for any stockbroking firm that may want to employ any of the former employees, directors and executives of the expelled firms to seek clearance from the Exchange.

    According to the provision under the “Specific Actions Requiring Prior Consent of the Exchange,” a dealing member shall not be allowed to do any of the following without the prior written consent of the Exchange including employing any of the directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the Exchange or the Securities and Exchange Commission (SEC).

    Others that required clearance from the Exchange before employment included any person expelled, as an authorised clerk or its equivalent, from any other exchange; any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership; any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty.

    A source told The Nation that the Exchange has been working to address the root causes of frauds among stockbroking firms. The source said inactive and illiquid stockbroking firms are prone to frauds, referring to a recent move by the Exchange to amend its rules to pave way for delisting of inactive stockbroking firms.

    The draft amendment to the rules and regulations governing dealing member is titled ‘revocation of inactive dealing member firms’ licences and it has already passed the initial rule-making processes.

    The Nation’s check indicated that the NSE has marked 81 out of the 322 stockbroking firms on its dealing members’ list as inactive. According to the amendment, where a dealing member is inactive for a period of six consecutive months, the Exchange shall revoke the licence of the dealing member. A dealing member must not under  no circumstances cease to carry out  its day to day business activities for, which it was licensed to operate without any reasonable cause.

  • African brokers plan reinsurance firm

    African brokers plan reinsurance firm

    Brokers around the continent are working on reinsurance brokers project that would challenge foreign brokers who have over the years taken away reinsurance businesses from Africa for lack of skills and capacity, Chairman, Association of African Insurance Brokers (AIBA), Prince FeyisayoSoyewo, has said.

    Prince Soyewo spoke with The Nation in Kigali, Rwanda while speaking on the impact of the association on brokers across the continent.

    According to him, the project will soon produce a reinsurance company that will enable AIBA members to be shareholders.

    He said: “We have a project which we call reinsurance brokers project. It will bring all brokers in the continent together.

    “Over the years the foreign brokers have used skill and capacity to shortchange us and the bulk of the money goes out of Africa. There was no single broker that could challenge them, and so the of executives African Insurance Organisation (AIO) executives came up with the idea that we should form a body.

    “They urge us to pull our efforts together, become one and then come to them, the AIO for support. Presently, we are coming together and updating our figures. In about six months from now, before the next AIO, we would have put everything together and then invite our members’ to be shareholders of the company. It will be similar to legal session in Nigeria of those days”.

    The AIBA Chairman explained that Africa Reinsurance will be encouraged to support them in that session and it would transform into savings for Africa.

    He said the association has achieved a lot at the just concluded AIO conference.

    “We are consolidating the AIO chairman has taken special interest in AIBA and gave his words to give us all the necessary support to move forward.

    “I am very optimistic that AIBA will come out strongly and will achieve lofty goals. We held our Annual General Meeting during the conference and the attendance was impressive. More people are itching to join us and about 20 new members came and are processing necessary documentationto become our member.

    “AIBA is getting stronger and by next year when we’ll hold another AIO conference, we’ll see a stronger, more virile and larger AIBA”, he said.

  • Brokers, stakeholders brainstorm on economic growth

    Brokers, stakeholders brainstorm on economic growth

    Capital market operators and other stakeholders from the private and public sectors will meet later this month to deliberate on strategic policy initiatives that would further unlock the potential of the key sectors of the Nigerian economy and deepen the capital market.

    President, Chartered Institute of Stockbrokers (CIS), Mr. Ariyo Olushekun, said the year national workshop of the institute would create a forum for key players in both the public and private sectors to brainstorm and generate ideas which will serve as inputs to national planning and development.

    The workshop with the theme: Update on the transformation agenda and expectation from the public and private sectors, is scheduled to take place in Abuja from April 23 to 25.

    According to him, experts will consider ways in which the capital market can support key sectors such as power and agriculture sectors in order to further encourage economic growth.

    “It goes without saying that these critical sectors hold strategic importance to the realisation of the vast potentials of the Nigerian economy, and reinvigoration of the capital market,” Olushekun said.

    He noted that the public-private discourse at the workshop would assist government agencies to track their performances and provide opportunities to stakeholders to influence government policies.

    “The workshop could not have come at a better time, as it holds great promise to contribute immensely to the transformation, not only of the capital market, but the national economy as a whole,” Olushekun said.

    According to him, the engagements between stakeholders had benefited the country in many way with more benefits to come in the area of providing useful input to the national budget and enhancing the quality of the policy making process.

    He noted that through the annual workshop, capital market operators have been able to collaborate with key arms and agencies of government, including the Presidency, National Assembly, Federal Ministry of Finance, Central Bank of Nigeria, Securities and Exchange Commission and the Nigerian Stock Exchange among others.

    Chairman, National Workshop Committee, Mr. Albert Okumagba, noted that the continued emphasis on agriculture in the workshop, was due to its importance to Nigeria’s economic growth and development.

    According to him, the critical factors that will bring about tremendous improvement in trade, investment, energy and agriculture would dominate discussion at the workshop.

    Those that are expected at the event include President Goodluck Jonathan; Vice-President Namadi Sambo; the Senate President, David Mark; and the Speaker House of Representatives, Alhaji Aminu Tambuwal.

    Others are: the Ministers of Finance; Industry, Trade and Investment; Petroleum Resources; Agriculture and Power.

  • NSE’s sale: Brokers may get N200b

    NSE’s sale: Brokers may get N200b

    Members of the Nigerian Stock Exchange (NSE) may realise more than N200 billion from the demutualisation of the Exchange as government and the council of the NSE prepare the groundwork for its sale.

    Sources at the weekend estimated the value of the NSE variously at between $1 billion and N200 billion. Many analysts estimated the value of the NSE to exceed N200 billion given the recent investments in technologies and new growth initiatives.

    The NSE is owned by mainly stockbrokers and some high networth individuals and institutions. At the last count, the NSE has some 350 individual and institutional members including some 255 active dealing members.

    Demutualisation is the process of changing a member-owned stock exchange, otherwise known as mutual exchange, to a corporate entity owned by shareholders. Established as Lagos Stock Exchange (LSE) in 1960, the NSE was conceptualised as a limited by guarantee not-for-profit organisation thriving on the goodwill, reputation and integrity of its members.

    A market source said stockbrokers could make representation to the market regulators to use the net proceeds from the demutualisation to beef up their capital base.

    Securities and Exchange Commission (SEC) has confirmed that the Federal Government is currently reviewing the guidelines for the demutualisation of the Nigerian Stock Exchange (NSE) to ensure that the sale of the Exchange conforms to the international best practice.

    The demutualisation entails the allotment of shares of the NSE to existing members and subsequent or concurrent sale of similar shares to strategic and general investing public.

    Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, confirmed that the guidelines for the demutualisation are currently undergoing the scrutiny of the Ministry of Finance to ensure they serve the best interest of the country.

    According to her, SEC had developed a framework for the demutualisation of the NSE and future securities exchanges based on the work of the technical committee and inputs from Nigerian and international experts and stakeholders and submitted this to the government for review and consent.

    The confirmation comes on the heels of announcement last week by the National Council of the NSE seeking to engage the services of a consortium of two financial advisers in preparation for the commencement of the demutualisation.

    Ms Oteh said the public interest is paramount in the demutualisation of the NSE given the symbolic importance of the Exchange as the only equities’ Exchange in Nigeria and the historic role the government played in setting it up.